Andrew Haldenby: Cameron is in danger of letting the NHS go backwards

When David Cameron set out his five principles of reform this week, he forgot one: choice and competition. The Government thinks it is being clever about language - that they can still do choice and competition without talking about it. But it cannot do so while opposing them, and while putting into place policy levers that prevent them from happening. As the Blairite former Minister Lord Warner stated at Reform's conference on global health innovation on Wednesday, “if we weaken on competition, all will be lost”.

First, the Government has, remarkably, decided to undermine the purchaser-provider split introduced by a Conservative Government in 1991. The original Health and Social Care Bill preserved that split. GP-led commissioners would purchase care from providers (typically hospitals) which were entirely separate. On Tuesday, the Prime Minister changed that and said that each commissioner’s board would now include providers, in the form of at least one hospital doctor and nurse. At a stroke, the bodies in charge of the NHS budget will become partly interested in defending existing provision rather than getting best value for the money.

Second, the Government has weakened competition by changing the role of Monitor (the key regulator of NHS provision). The original Health and Social Care Bill gave Monitor the duty of “promoting competition” in order to improve health services. This followed the example of other successful health systems based on competition. In 2010, for example, Reform held a seminar with Wynand van de Ven, one of the foremost Dutch academics who was instrumental in designing that country's competitive health system. He said: "It is so exciting that you are going to have an economic regulator: that is the right way to manage a market to improve quality for patients and drive down costs". (The Netherlands has four regulators, each with clearly defined roles: a Competition Authority, a Quality Authority, a Solvency Authority and a Consumer Protection Authority.)

On Tuesday, the Prime Minister changed this completely. He announced that Monitor will now have “a new duty to support the integration of services - whether that’s between primary and secondary care, mental and physical care, or health and social care”. Recent history shows that this will gravely undermine competition. In 2009, the Brown Government also committed to “integration”, alongside its wish to make the NHS the “preferred provider” of care. The result was the creation of local monopolies as hospitals began to absorb primary care providers. Commenting in the Health Service Journal this week, Anna Dixon, the policy director of the King’s Fund, said that the change would make Monitor less likely to prevent or break up monopolies.

Some elements are long lost. Price competition was dropped with a promptness that could not be improved upon. The Indian Narayana Hrudayalaya Hospital, one of the world’s leading cardiac centres, does open-heart surgery at a tenth of what it costs in the NHS and their clinical measures for heart bypasses are easily as good as ours. Wouldn’t it be a good idea to let them run the London Heart Hospital? This would dramatically allow more for less. It is difficult to see how the health service will achieve efficiency savings - rather than salami slicing - without this.

Other facets of competition have been publicly and repeatedly lambasted. The Prime Minister’s repeated attacks on private sector “cherry picking” are misguided. Private sector companies do not cherry pick NHS patients: they receive NHS patients by the choice of the patients themselves or by the choice of the NHS commissioners. They do as much as they are allowed to do. In 2009-10, the largest group of patients treated by the private sector were not routine acute patients but those with learning difficulties and mental illness.

David Cameron was right to say on Tuesday that the NHS will continue to use private sector and charitable providers. But the test of health policy is the extent of competition, not the nature of the provider. Private sector monopolies are just as bad as public sector ones. Competition is the key - and competition is the main sacrifice of the Government’s NHS retreat.